In its confidential report for the Pentagon and industry officials -- first revealed by The Washington Post -- the DSB claims that blueprints and data pertaining to two dozen weapons systems -- including U.S. missile defenses and combat aircraft and ships -- were accessed by Chinese hackers. The report, by the mixed civilian/government board, which advises government and corporate policy makers, does not suggest necessarily the Chinese have stolen complete designs.

The U.S. federal government recently expressed the desire to force "help" onto private sector utilities. However, the report basically indicated that at this point the federal government is incompetent when it comes to cybersecurity when it comes to foreign threats, unable to sufficiently block attacks on itself, let alone others.

Mark Stokes, executive director of the Project 2049 Institute -- an Asian-centric D.C. think-tank, comments, "[The intrusions are] staggering. These are all very critical weapons systems, critical to our national security. When I hear this in totality, it’s breathtaking."

II. Experts Astounded by China's Weapons Progress

China has expressed frustration that its military trails the U.S.'s technologically. But recently the Asian nation has been shocking observers with its weapons development. While "experts" expressed skepticism that China would be able to field a stealth fighter, it shocked the world in Jan. 2011 showing off a fully functional design.

China's strategy to update its military in the most cost effective manner possible appears to be two-fold. Some technologies it buys at budget rates from U.S. Cold War-era rivals like Russia -- such as its first aircraft carrier that deployed last year (a retrofitted Russian craft). Other technologies it simply steals from the U.S. and builds itself.

The hodge-podge approach isn't pretty, but it may prove modestly effective given the size of the nation's military.

James A. Lewis, a cyber-policy expert at the Center for Strategic and International Studies (CSIS), remarks, "You’ve seen significant improvements in Chinese military capabilities through their willingness to spend, their acquisitions of advanced Russian weapons, and from their cyber-espionage campaign. Ten years ago, I used to call the PLA [People’s Liberation Army] the world’s largest open-air military museum. I can’t say that now."

A frustrated unnamed senior military official told The Washington Post that the Chinese strategy of stealing U.S. technology has allowed it to save billions. The source comments, "In many cases, they don’t know they’ve been hacked until the FBI comes knocking on their door. This is billions of dollars of combat advantage for China. They’ve just saved themselves 25 years of research and development. It’s nuts."

According to the report, the stolen information could be used not only to make weapons, but also to counter U.S. designs by pinpointing and compromising their digital or physical weaknesses. Winslow T. Wheeler, director of the Straus Military Reform Project at the Project on Government Oversight (POGO), comments, "If they got into the combat systems, it enables them to understand it to be able to jam it or otherwise disable it. If they’ve got into the basic algorithms for the missile and how they behave, somebody better get out a clean piece of paper and start to design all over again."

III. Obama Administration's "Tough Talk" Approach Fails

According to The Washington Post report, sources indicate that a year ago U.S. officials met with top Chinese officials in a closed door meeting to present evidence that they had "caught" China in cyberspying. The Chinese, unperturbed responded with their usual denials.

First reported by the Australian Broadcasting Company, Des Ball, an Australian National University cybersecurity expert, suggests that the hack could allow Chinese spies to effectively bug the building.

The ASIO building [Image Source: AFP]

The spy agency's chief dodged the reports calling them "unsubstantiated", while refusing to definitively confirm or deny if data loss had occurred. He commented, "This building is a very secure, state-of-the-art facility. I'm not going to comment on operational matters involving the Australian Security Intelligence Organization or any security matters."

The lakeside glass-and-concrete structure has been plagued with budget overruns and delays. The structure is located in Canberra, a city in southeastern Australia.